Inland Private Capital Corporation (IPC), an alternative investment management firm and a sponsor of 1031 tax deferred exchanges, has sold a 377,300-square-foot Bank of America office building, located in the Hunt Valley submarket of Baltimore, Maryland, for $99.3 million. The sale was facilitated on behalf of one of Inland Private’s 1031 exchange investment programs.
Constructed in 1974 and expanded in 1997, the Hunt Valley building represented Inland Private’s largest pre-recession investment holding in the corporate office sector.
The property was purchased in July 2008 and the company managed the property through the economic and real estate downturn of the Great Recession. In anticipation of the program’s liquidity event, the asset manager obtained a lease extension and completed a refinance and recapitalization of the property.
“Several years ago, we began the implementation of our exit strategy by building up a substantial property reserve balance, while maintaining a consistent distribution throughout the hold period,” said Rahul Sehgal, chief investment officer of IPC.
He added, “Cash management of reserve dollars paid off during negotiations with Bank of America, as we were able to secure a 10-year lease extension which included a parking lot expansion project to construct an additional 550 spaces on the property. The vast majority of the tenant improvement dollars were funded by reserves, avoiding the need for a capital call from investors.”
The company noted that the Hunt Valley property provided a 7.06 percent average annualized return to investors and resulted in a total return to the investors of 177.25 percent (calculated based on the total amount of original capital invested in the property).
To date, in 2019, IPC has completed 19 full-cycle asset dispositions, representing an aggregate sale price of $665.7 million, returning more than $322.8 million in sales proceeds to investors.
In other company news, Inland Private recently launched a new investment platform focused on acquiring, owning and managing U.S. senior living communities.
Inland Private Capital Corporation had sponsored 241 private placement real estate offerings as of June 30, 2019, many of which were designed for investors seeking replacement property to complete an IRS Section 1031 exchange. The company is the largest provider of securitized 1031 exchange opportunities in the country, with a national footprint of more than 600 properties, representing approximately $8 billion in assets under management.